Trading psychology means trading emotionless bypassing the weakness of human nature, i.e. fear, greed, impulsiveness, impatience, etc.
When a trader is a newbie he wants to earn maxium amount possible on every single pip or tick in the market, never letting the market go against him. Which gives rise to numerous human emotions. For example, a new trader finds a great trade, very sure that the market will definitely go in the predicted direction. What he does is opened a trade with 60% of equity in his account, whereas tecchnically he is supposed to use only 5% of his equity. Now he places trade after trade, trade after trade once all trades are opened, he sits by his computer very anxiously .... watching ever single tick of on the chart ............ extremely confident that today he is going to earn twice the amount in his account. After going in the predicted direction for several pics the market rebounds and start to move in the opposite direction (the cause can be any like change of trading session, an economic announcement, support/resistance is reached, etc.)
This new trader start feeling very anxious and his heart start throbbing as if it may come out of his chest. When the market reached the breakeven limit where he started his first trade, he throw another trade in the market thinking that since the market is bound to move as predicted (based on this trading strategy) it is a good time to re-enter again to have more profit.
Market doesn't stop there, is start to move against the predicted direction and moves very fast as if a major economic new is released. Very confused, Mr. Newbie now becomes very fearful and watches the market with a shock.
Market moved some 40 pips against the last trade and the equity in his account is about to reach the bottom. This newbie trader is quite aggressive and opens another trade thinking that the market has now reached support/resistance and therefore it is a good time to enter again and make a perfect kill.
The market consolidates here for few minutes and after a pullback start its journey against the newbie trader. Now Mr. Newbie is literally crying and praying to the God to save his account.
Market is ruthless and it runs over hundreds and thousands of traders everyday, where is giving bounty to disciplined, experienced and patient traders. Market keeps moving and the accout of Mr. Newbie is finally exhausted and Margin Call is initiated.
This is a very typical story of a new, indiciplined, over-confident and un-trained trader which are very very common in almost every speculative market.
Newbbies study some forex book or attend some forex course or read some ebooks or read some trading strategies, doing some practice .... become the most confident and DANGEROUS traders in the world. They start to think that they can best shit out of everyone in the market. It takes very little time by the market to humble them. having lost their account few times like me, they become careful and disciplined traders and start to respect the market.
